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Is cash still king?

POSTED ON 15 AUGUST 2017

With the introduction of new coins and notes of late, such as the pound coin and five pound note, and with a new ten pound note coming out soon, it may come as a surprise to hear that cash may no longer be the king of wallets and purses

By next year, debit cards are scheduled to overtake cash, claiming the top spot as the UK’s most frequently used payment method: a feat that was originally predicted not to take place until 2021. That’s according to forecasts by payments industry trade association, Payments UK, who say that this rise is due to the growing trend in using contactless.

Figures from the association show that in 2016, debit cards were used 11.6 billion times, with contactless making up just over one in five of these transactions. When it came to cash, last year it was used for 15.4 billion payments. By next year, it’s predicted that there will be 13.4 billion debit card payments – one in three of which are expected to be contactless. Compare this to the predicted 13.3 billion cash payments for 2018 and it’s clear to see that cash will no longer be the most frequently used payment method.

Adrian Buckle, chief economist at Payments UK, said that although it’s clear that contactless is growing in popularity, it doesn’t necessarily mean it marks the death of cash: “This is a significant shift but it’s vital to note that even in the face of this change, we believe any claims the UK will soon become a cashless society are wide of the mark.”

And in a move that will please consumers who use cards to purchase goods, the Government has announced that paying by card will be free for consumers from next year – putting an end to ‘rip-off’ card fees.

The plans include all consumer facing credit and debit fees to be banned from 2018 under an EU rule change and any organisations caught charging customers for card payments will be made to repay the fees; and for those that refuse, they will be slapped with fines. Those under fire include shops, restaurants, travel firms, councils, HMRC, and other government agencies including the DVLA.

So what cards will be affected by the new UK ban? Consumers paying using Visa, Mastercard, Paypal and American Express cards will benefit from the changes.

The rules will also apply to corner shops who currently charge customers to make small payments by card although there it’s predicted that they may just increase the limit for card use to £10 in order to avoid losing out on smaller card payments.

Stephen Barclay, Economic Secretary to the Treasury, said: “Rip-off charges have no place in a modern Britain and that’s why card charging in Britain is about to come to an end. This is about fairness and transparency, and so from next year there will be no more nasty surprises for people at the check-out just for using a card.”

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